Samsung Display to cut costs by diversifying ACF suppliers

Samsung Display is looking to diversify its portfolio of ACF (Anisotropic Conductive Film) suppliers, according to industry sources on May 27.

ACF is a core part of display technology, indicating adhesive material used to connect display panels such as LCDs and OLEDs with electronic circuits.

The display-maker plans to reduce its reliance on Kukdo Chemical, which recently acquired Samsung SDI’s ACF unit. At the same time, it will be getting more ACF materials from another small-sized manufacturer, which will partner with Samsung Display’s LCD plants in Suzhou, China. Next year, it will supply all of Samsung’s display module plants in Vietnam.

This way, Samsung Display will be able to cut costs by up to 10 billion won ($8.4 million) a year, according to market watchers.

“Samsung Display planned the diversification in tandem with Samsung SDI’s decision to unload its ACF unit,” said one industry watcher on the condition of anonymity.

Previously, Samsung Display had depended largely on its affiliate Samsung SDI for ACF suppliers. But there had been complaints within the display-making unit that SDI was too pricey.

Due to the latest developments, Kukdo Chemical is reportedly in a tight spot, especially because it can no longer rely on Samsung Display as a steady customer.

“Unless Kukdo Chemical is able to offer more competitive ACF prices, its market share will most likely suffer,” said another industry watcher.

ACF is composed of polymer resin, adhesive, and conductive particles for electrical signal transmission. It’s widely applicable for smartphones, tablets and automobiles. The global ACF market is estimated at around 300 billion won.

In the early 2000s, Japanese companies such as Sony and Hitachi Kasei led the markets, but they have been replaced by manufacturers in Korea, Taiwan and China.